A month ago in Madison, NJ, a pair of Durham entrepreneurs took the stage alongside 14 other innovators in the real estate industry.
They pitched a technology platform called First,
which promises Realtors more relevant data and help predicting the best leads within their network and messaging them.
An industry reporter covering the event called First “game-changing”
and its predictive analytics tool “really sexy”.
It’s a company “trying to creatively solve a “small” problem in the industry”, he wrote, probably why real estate behemoth Realogy selected it from a pool of 125 emerging technologies to pitch at the annual FWD Innovation Summit.
First didn’t take home the $25,000 prize—the startup came in second—but its presence among the elite group is proof that a lot can happen in a year. Also, that getting immersed in an industry is critical for launching a new startup.
The founders of First wouldn’t say they’ve completely pivoted since raising a $750K seed round
last year to help Realtors with lead generation. They’d say that they dove deep into their industry, learned the real challenges that Realtors face and targeted their technology platform to solving them.
Turns out that lead generation isn’t the big problem—120 million leads were sold to Realtors last year. But only about 15 percent of the 5.5 million real estate transactions that happened in 2015 came from leads. More than 70 percent of transactions came through pre-existing relationships.
And according to First CEO and co-founder Mike Schneider, “people haven’t built a lot of technology to help agents do that better at scale.”
And so the platform he and co-founder Jess Martin pitched in front of hundreds in New Jersey uses the startup’s powerful analytics engine to determine who in a Realtor’s existing network is most likely to buy a home, and then offers ways to personalize the right message to them. Realtors in 12 states are already using it.
In coming weeks, the pair will close a bridge round of funding. And by year’s end, they hope to bring in $5 million in venture capital to ramp up sales and add on to their team of a dozen full-time and contract workers. They’re already hiring a marketing lead along with a sales account executive and product engineer.
The First platform will be targeted to the highest performing real estate professionals in the field, the ones putting systems, processes and technologies in place to execute better on the growth side of their business. They could work for major brokerages like Realogy’s Berkshire Hathaway, Coldwell Banker or Sotheby's, but 40 percent of brokerages are independent and that number is growing. First will especially target them.
First will replace traditional means of staying in touch with customers—the mass emails, magnet calendars, postcards and candy tins on doorsteps during holidays—with personalized follow up with people most likely to buy a new home in coming months.
That comes from data crunched by First’s predictive analytics engine, which analyzes public and private data sets for 760 factors that determine the likelihood that a person will move.
“We are helping them change their behavior and understand their network,” says Martin. “They are used to treating everyone the same.”
First costs $399/month and includes coaching. Another stream of revenue will come from partnerships with companies that compliment its services. Already, First integrates Durham startup AdWerx
, so First’s Realtor customers can advertise to specific potential homebuyers in their network online and on mobile devices in a matter of three clicks. (More on AdWerx here
Schneider and Martin expect to partner with other companies that have creative marketing solutions.
“We are focused on key integrations where we can help agents build custom follow up and have more ammo, and leverage our intelligence across all of that,” Schneider says. “We want to help them personalize at scale.”
First’s next national gig is coming August 3, where Schneider will speak about artificial intelligence and predictive analytics on a panel at the Inman Connect conference
. The keynote speakers for the event are telling—there's the CEO of News Corp, which acquired the real estate tech company Move for nearly $1 billion, and the COO of Zillow Group, which bought Trulia last year for $2.5 billion.
It’s a sign that investors continue to be interested in the space, but also that competition is heated.
Martin says First has seen a couple of direct competitors pop up in the last six months, using similar language and marketing messages.
But he believes First’s advantage is in the time the team spent understanding the industry’s challenges, building a solution to address them and networking in the right places.
“It’s such a wide open area—trillions worth of transactions,” he says. “A lot of pop for a lot of companies to dive in here and solve problems agents are experiencing in really creative ways.”